Insurance is a business of providing specified benefits to insured parties in return for the payment of premiums. In the event of an accident or loss, a policyholder or a third-party claimant can obtain payments for insured services, as provided in an insurance policy, by filing an insurance claim with the issuing insurance company. Under many insurance policies, including for example workers' compensation and automotive collision policies, it is common for an authorized third party services vendor to provide services directly to the insured or claimant and receive payments on behalf of the insured party from the insurance company.
As the insurance business model relies upon an appropriate ratio of premiums to claims payments, it is important to ensure that only justifiable claims are paid. Accordingly, it is common for claims handling processes to include audits for validating that each billed service or referral, under each claim, has been provided by an authorized vendor according to relevant standards.
In fields of insurance such as worker's compensation, health care, or property and casualty loss, referrals audits require specific expertise relevant to the nature of each referral. Such expertise often is distinct from the actuarial and financial skills integral to insurers' businesses. Thus, particularly with reference to workers' compensation policies, most insurers prefer to rely upon the third party vendors to validate each referral submitted under a given claim. For this purpose, most insurers impose referral self-audit requirements on third party vendors as a condition of vendor acceptance. Additionally, most insurers have employees with relevant technical expertise, who periodically validate the results of vendor self-audits.
Self-audits can be burdensome in time and expense. Particular burdens include ensuring true random selection by the insurer of referrals to be audited, so that an entire population of referrals need not be audited by the vendor; and ensuring timely completion of the audit by the vendor. Whether the burden and expense initially are borne by the insurer or by the third party vendor, eventually the costs must be passed to consumers. Insurers, as any other service provider, wish to offer lower prices so as to attract more consumers. Thus, computerized methods and systems for expediting and automating vendor self-auditing have become highly desirable in the art of insured service referrals auditing.